At a tense meeting last January in Leinster House, the now caretaker minister told representatives from the National Maternity Hospital and the St Vincent's Healthcare Group (SVHG) - as well as officials from the HSE and Department of Health - that plans to colocate Ireland's busiest maternity hospital on the healthcare group's South County Dublin campus must proceed.

Varadkar, who last week hailed a decision by An Bord Pleanala to give the green light to the construction of a €710m new National Children's Hospital as "fantastic news", told the parties that other general hospitals, including St James's in Dublin, had stolen a march on St Vincent's in recent years.

"I'd hate to see you lose out on this," said Varadkar, referring to the huge capital injection - €150m and counting - that has been set aside by the HSE to build a new maternity hospital on St Vincent's Elm Park campus.

With the projected €60m proceeds of the sale of the NMH's dated Holles Street building to be gifted as part of the move, as well as "significant benefits in the form of enhanced facilities" for St Vincent's - according to the HSE - the country stood to benefit from a once-in-a-lifetime boost to maternity and neonatal services.

The colocation of the National Children's Hospital Group will see the amalgamation of Dublin's three children's hospitals at St James's, with the Children's Hospital Group retaining its own corporate and clinical governance structures.

But plans to colocate the National Maternity Hospital at St Vincent's in South County Dublin have derailed amid a bitter takeover row.

It is a row laced with overtures, perhaps more perceived than real, over the Catholic ethos of St Vincent's shareholders, the Religious Sisters of Charity, who tend not to carry out certain procedures such as tubal ligation (sterilisation) unless medically necessary.

First mooted in 1998, the colocation (as distinct from integration) of Holles Street on to St Vincent's grounds was announced after 10 years of planning and with great fanfare in May 2013 by then Health Minister James Reilly.

However, the plan began to unravel in November 2014. This was when St Vincent's indicated that Holles Street could only locate the new maternity hospital on its grounds if the National Maternity Hospital became a branch of its healthcare group, falling under its corporate and clinical control.

For its part, St Vincent's says that, unlike the colocation arrangement between St James's and the new National Children's Hospital, it cannot operate a large healthcare campus with what it describes as "competing systems" of clinical and corporate governance.

It says that the NMH, whose dissolution would require an act of the Oireachtas, will be able to maintain its "brand" and other functions such as clinical autonomy if it is subsumed into the St Vincent's group, a private limited company.

The new stipulation took the National Maternity Hospital by surprise, as the hospital (which, like Dublin's three maternity hospitals, operates under the mastership system) had always intended to transfer to St Vincent's as a stand-alone entity with responsibility for its clinical and commercial outcomes.

"There was never any discussion of a complete takeover until then," said one person familiar with the negotiations. "Had there been, it would have been a red line from the very start."

The divergence in approach to governance between Holles Street and St Vincent's coincided with significant changes to the board of the SVHG which saw the appointment of six new board members (in January 2015) announced by its then recently appointed chairman James Menton, a former partner at KPMG.

It also coincided with a turbulent deterioration in relations between St Vincent's and the Government over matters not directly related to the new maternity hospital, whose current master is Dr Rhona Mahony.

For more than a year, the St Vincent's group was at the centre of a heated controversy over a number of issues including alleged top-up payments for senior executives, governance arrangements and provisions that allow consultants with public hospital contracts to work in its private institutions.

The HSE provides public funds to the hospital group, comprised of St Vincent's University Hospital, St Vincent's Private Hospital and St Michael's Hospital in Dun Laoghaire. It paid the group almost €240m last year, but the complex relationship has been under strain after the HSE accused St Vincent's in late 2013 of breaking public pay rules.

Such is the complex accident of history that gave birth to much of our education and healthcare services, St Vincent's is a limited company, which provides public as well as private healthcare, yet is privately owned by a religious order.

The group's primary funding comes from the taxpayer, but it emerged in late 2013 that the group had used the State-funded hospital as collateral to develop its private facility.

As a result, St Vincent's bankers have first dibs over the tax-payer-funded public health facilities of the health group in the event of a default or future sale. The State has an option to buy the assets at market rate in either scenario - but that option is a sideline deal to the main banking arrangements of St Vincent's, whose financial reports for 2014 will not be filed until the end of the year.

The deterioration in relations between St Vincent's and the State reached a vituperative climax in April 2015 - when Tony O'Brien, the then director-general of the HSE, questioned the very viability of St Vincent's Private Hospital before the Dail's Public Accounts Committee.

He told the PAC that he felt the private wing had a "parasitic dependence" on the adjacent State-funded public hospital.

The remarks had nothing to with the National Maternity Hospital. But they may have had a direct bearing on the progression of the new maternity hospital plans - when, that day, the acting CEO of St Vincent's wrote to senior officials in the HSE, the corporate lead and primary funder of the colocation project.

The missive stated that St Vincent's would not be able to attend an imminent Project Board meeting or any other meetings regarding the relocation of the NMH until further notice, because of O'Brien's remarks to the PAC.

The timing of the exchange was disastrous for all parties which, despite Varadkar's intervention, saw St Vincent's describe the current situation as "pointless and futile" following a meeting of its board last Thursday.

For Prof Chris Fitzpatrick, former Master of the Coombe Hospital and advisor to the National Clinical Programme for Obstetrics and Gynaecology, it is patient safety, not corporate mechanics nor Catholic ethos, that requires the retention of independent governance for the NMH.

"St Vincent's do not have a track record in maternal and neonatal care," said Fitzpatrick, adding that maternity services are at risk in an integrated model, given they are competing poorly with other specialities including A&E, trauma and oncology.

"Corporate mechanics should not be a stumbling block to colocation which can generate huge efficiencies and synergies for both entities."

It is not just Holles Street. The Coombe and the Rotunda are also due to relocate - with their independent governance intact - to James Connolly and St James's under the Government's recently published National Maternity Strategy.

With the HSE still pursuing St Vincent's over aspects of its funding and corporate governance structures, including its consultants' pay casemix, the impasse does not augur well for the future of national maternity and neonatal services in Ireland.